Risk management in UK local authorities : The effectiveness of current guidance and practice

Local authorities in the UK have lagged behind other sectors in developing a sector‐wide approach to the risk management aspects of corporate governance. The governance framework published in 2001, however, goes further than the private sector combined code in its reporting requirements. This paper reviews the guidance documents issued by statutory and professional bodies and evaluates their effectiveness in assisting local authorities to meet corporate governance requirements for risk management. This analysis is supplemented by a study of the risk management structures and procedures in five UK local authorities in a research project funded by the Chartered Institute of Public Finance Accountants through the auspices of the British Accounting Association Public Sector Accounting Special Interest Group. Based on a number of in‐depth individual interviews this study notes several areas of weakness in both the guidance offered and the policies adopted by local authorities.